ACCELERATION OF INVESTMENT THROUGH THE STABILIZATION MONEY

Indonesia downfalls in the protracted economic crisis, one of reason is inability of the government to restore the precrisis level of investment in 1997, although the government has enforce Law No. 1 of 1967 Jo No 11 of 1970 on Foreign Direct Investment (FDI) and Law No. 6 Years 1968 Jo No 12 Year 1978 on Domestic Investment (DCI)., but the result is still not satisfying. The purpose of this study is to find out whether the investment is quite effective in investmentaccelerating through the stabilization of money.This is very important because the stabilization of money will raise investments, which will finally give great impact on the condition of economy of the state. The data of the research is collected since 1970 to 2012.The hypothesis is tested using econometric models. The main advantage of econometric modelsis it is able to handle the mutual dependence (interdependence). Besides, econometric model is an invaluable tool for understanding the way the economic system works and so to test and evaluate policy alternatives. Hypothesis is tested using multiple regression with Two Stages Least Square method. The result of this study showed thatthrough the stabilizationof money could accelerate the investment by looking at the intermediate indicators on the exchange rate but cannot be seen through the indicators of inflation